Correlation Between Rush Street and Microsoft
Can any of the company-specific risk be diversified away by investing in both Rush Street and Microsoft at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Rush Street and Microsoft into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Rush Street Interactive and Microsoft, you can compare the effects of market volatilities on Rush Street and Microsoft and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Rush Street with a short position of Microsoft. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rush Street and Microsoft.
Diversification Opportunities for Rush Street and Microsoft
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Rush and Microsoft is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Rush Street Interactive and Microsoft in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Microsoft and Rush Street is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Rush Street Interactive are associated (or correlated) with Microsoft. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Microsoft has no effect on the direction of Rush Street i.e., Rush Street and Microsoft go up and down completely randomly.
Pair Corralation between Rush Street and Microsoft
Considering the 90-day investment horizon Rush Street Interactive is expected to generate 2.36 times more return on investment than Microsoft. However, Rush Street is 2.36 times more volatile than Microsoft. It trades about 0.16 of its potential returns per unit of risk. Microsoft is currently generating about 0.03 per unit of risk. If you would invest 521.00 in Rush Street Interactive on August 28, 2024 and sell it today you would earn a total of 859.00 from holding Rush Street Interactive or generate 164.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 98.58% |
| Values | Daily Returns |
Rush Street Interactive vs. Microsoft
Performance |
| Timeline |
| Rush Street Interactive |
| Microsoft |
Rush Street and Microsoft Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Rush Street and Microsoft
The main advantage of trading using opposite Rush Street and Microsoft positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rush Street position performs unexpectedly, Microsoft can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Microsoft will offset losses from the drop in Microsoft's long position.| Rush Street vs. Genius Sports | Rush Street vs. Gan | Rush Street vs. Ballys Corp | Rush Street vs. Hims Hers Health |
| Microsoft vs. Daido Steel Co | Microsoft vs. Safety Insurance Group | Microsoft vs. BLUESCOPE STEEL | Microsoft vs. Reinsurance Group of |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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